HSBC sets aside $2 b for mis-selling, US issues

Tuesday, 31 July 2012 00:49 - - {{hitsCtrl.values.hits}}

LONDON, (Reuters): HSBC set aside $2 billion to cover US law enforcement and regulatory costs and to compensate British customers for mis-selling as it reported a 3 per cent dip in underlying profit.

A US Senate report this month criticised HSBC for letting clients shift funds from dangerous and secretive countries, and HSBC said on Monday it was setting aside $700 million to cover “certain law enforcement and regulatory matters”.

Analysts have said the issue could result in a fine of about $1 billion.

The Senate report criticized a “pervasively polluted” culture at the bank and said, between 2007 and 2008, HSBC’s Mexican operations moved $7 billion into the bank’s US operations.

Chief Executive Stuart Gulliver on Monday apologised for the affair.

“We apologise for our past mistakes in relation to anti-money laundering controls, and it is a priority for senior management to build on steps already taken to manage risk and ensure compliance more effectively,” he said.

Europe’s biggest bank set aside $1.3 billion to compensate UK customers for mis-selling loan insurance and interest rate hedging products to small businesses.

HSBC on Monday reported a pre-tax profit of $12.7 billion for the six months to the end of June, up 11 per cent on the year and above an average analyst forecast of $12.5 billion, according to a poll by the company. But underlying profit, stripping out gains from US assets sales and losses on the value of its own debt, was down 3 per cent on the year to $10.6 billion.